Posted By Don Boudreaux On May 20, 2010 @ 3:00 pm In Growth,Hubris and humility,Intervention,Man of System,Myths and Fallacies,Trade | Comments Disabled

Here’s a letter sent today to the Washington Post:

Fearful of the alleged threat that China’s growing economy poses to America, James McGregor asks “How do we overcome the fundamental disconnect between our system of scattered bureaucratic responsibilities and almost no national economic planning vs. China’s top-down, disciplined and aggressive national economic development planning machine?” (“Time to rethink U.S.-China trade relations[1],” May 19).

This question is a profusion of confusion. For example, if “top-down, disciplined and aggressive national economic development planning” is key to economic success, why did China’s economy begin growing only after great swathes of it were liberalized? If Mr. McGregor’s premise were correct, China under Mao would have been an economic megastar, while the liberalization launched by Deng Xiaoping – which significantly reduced top-down planning as it decentralized economic decision-making throughout China – would have caused that economy to falter and shrink.